Cash can be king: the cash market is so efficient that the buy-sell spread is minimal. For example, in Salta in Argentina's Northwest, street vendors would buy one USD at ARS 3.05 and sell one USD at ARS 3.09, amounting to only a 1.3% spread. In Arica, Chile, the spread on the street was slightly larger, buy at CLP 535 and sell at 547, amounting to 2.2%.
By contrast, the effective exchange rate for withdrawing ARS 1500 using an ATM card comes out to 2.96. How did that happen? Well, the base rate for transfers was good, ARS 3.0595 per USD. Add to that a 3% charge for foreign exchange transactions plus a non-network ATM withdrawal fee of USD 3, and instead of USD 492, your ARS 1500 end up costing you USD 509. I guess the way to look at it is that you are paying almost 4% for the convenience and security of not carrying thousands of dollars in cash.
Credit cards can be much kinder. The effective exchange rate for purchases with Citibank Dividend Mastercard came out to CLP 527 and with American Express to 531, only 1.5% or 0.75% on top of the street rate, respectively. In comparison, the effective exchange rate for ATM withdrawals was 513 CLP.
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